In the latest sign of the growing divide between Washington and its allies, the European Union's foreign policy chief announced Monday that the bloc was creating a new payment mechanism to allow countries to transact with Iran while avoiding U.S. sanctions.
Called the "special purpose vehicle" (SPV), this mechanism would aim to "assist and reassure economic operators pursuing legitimate business with Iran," according to a joint statement released by the remaining members of the Iran nuclear deal — France, Britain, Germany, Russia and China.
"This will mean that EU member states will set up a legal entity to facilitate legitimate financial transactions with Iran and this will allow European companies to continue to trade with Iran in accordance with European Union law and could be open to other partners in the world," Federica Mogherini, the EU's high representative for foreign affairs, told the UN General Assembly on Tuesday.
The technical details will be worked on by experts in future meetings, she said. But analysts already doubt the viability of the plan — while the SPV would establish a clearer financial channel to trade with Tehran, it's not likely to be able to protect participating companies from U.S. secondary sanctions.
American sanctions have already been imposed on a number of Iran's industries — including aviation, metals, automotives and its ability to trade gold and acquire dollars — as a result of President Donald Trump's withdrawal from the 2015 nuclear deal. On November 4, a second round of penalties will fall on Iran's massive oil sector, which accounts for 70 percent of the country's exports. Iran is the world's seventh-largest oil producer.